Food prices push CPI to 3-month high

Food inflation, as measured by the Consumer Food Price Index, rises to 4.49%

- Zia Haq

Consumers will feel the pain of high food inflation at least until September, analysts said on Wednesday, as the knock-on effects of last year's lower output of key staples and torrential rains this month hammered household budgets.

Food inflation, as measured by the consumer food price index, was at 4.49% in June, compared to a 2.96% climb in the previous month, official data showed on Wednesday. Overall retail inflation rose to a three-month high of 4.81% as a result.

Untamed food prices could see a rise in retail inflation rising beyond the Reserve Bank of India (RBI)'s target of 4% again. In May, consumer inflation cooled to 4.5%, falling to the lowest level in two years. To be sure, the central bank's tolerance limit for inflation is 4% plus or minus 2%, and this is the fourth straight month that the print is within that range, although RBI Governor Shaktikanta Das has categorically stated that the target is 4% (not 6%).

The Modi government has invoked a slew of anti-inflation measures to cool prices, including limits on how much stocks food traders can withhold, ahead of crucial assembly polls later this year and a general election due next year.